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tv   Nightly Business Report  PBS  February 11, 2012 1:00am-1:30am PST

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>> susie: athens descends into riots, as the greek people push back against tough new spending cuts, throwing a debt deal in doubt and sending stocks around the globe lower. one thing not going lower-- pump prices. gasoline is close to $4 a gallon in some places and $5 may not be far behind. >> i'm diane eastabrook in chicago. the biggest generation since the baby boomers are getting a full court press from corporate america. >> tom: it's "nightly business report" for friday, february 10. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by:
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captioning sponsored by wpbt >> susie: good evening, everyone. one word dominated trading here today at the new york stock exchange: greece. there were new doubts today about greece's austerity plan and new concerns that it could default. tom, european finance ministers said greece needs to make more spending cuts to qualify for bailout loans. >> tom: late today, susie, greece's cabinet okayed a bill that included those cuts. it's set for a vote in parliament sunday. this development came after u.s. stock indices had their worst day of 2012. the s&p 500 and nasdaq broke their five-week winning streaks.
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the dow tumbled by 89 points, the nasdaq fell 23, and the s&p fell nine. >> susie: more and more americans are beginning to understand how a small country like greece. can have a big impact on europe and the rest of the world. darren gersh reports. >> reporter: it's a pretty common greek expression-- "life is difficult." and political economist matthias matthijs says the hard times in greece are being felt today around the world. >> it's astonishing in many ways that a small country the size of 2% of the eurozone can have this big of an impact. i mean, how long have we and a problem with greece now, i mean two years now. and still it doesn't' seem to get solved. >> reporter: markets around the world thought the greek debt deal was all but done and they could take the risk of a greek default off the table. but today the prime minister warned of chaos if a new austerity measure and debt deal is defeated in parliament this weekend. matthijs says there are renewed fears a greek default could hurt banks that emerged from the
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financial crisis larger and more inter-connected than ever. >> especially french and german banks are heavily exposed to this. if they have to take a dramatic hit from this, then this will affect the american financial system too. because we are so integrated-- wall street, london. >> reporter: there are reasons to be more optimistic europe will avoid a financial panic. germany is now more willing to help fund cash-starved countries to the south. and the european central bank is pumping money into the financial system. but nicolas veron says the central issue remains unresolved. >> nobody sort of knows at this point what sort of contract you buy when you buy a sovereign bond of a eurozone country. even a strong country, even germany. so the greek negotiation is framing an answer to this question and this is why it is so important. >> reporter: this evening, the greek cabinet approved a draft bill to restructure the country's debt and avoid defaulting on bond repayments due next month. and investors continue to believe most greeks want to see theicountry stay in the eurozone.
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but nick sargen at fort washington investment advisors says that doesn't mean the greeks won't vote with their feet. sargen recently heard from a cousin in greece who is a skilled engineer. >> so this is a highly skilled person, a young person, um saying, you know, wow it's really gotten bad, to the point where she would consider relocation out of the country. >> reporter: the pain in greece continues to mount. the country's creditors are demanding a 22% cut in the minimum wage, this for a country where one in five workers is already unemployed. darren gersh, "nightly business report," washington. >> tom: while many are worried about just how greece's problems will impact the u.s., we learned today that u.s. exports to europe grew in december. the overall trade deficit widened to almost $49 billion in december as we brought in more goods than we shipped out. exports to europe rose more than 7%, after a steep drop in november. the euro-zone consumes nearly one-fifth of all u.s. exports
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and with the region still in turmoil. economists worry a deep recession there could hit u.s. exports. >> susie: word that greece's bailout package hit a road block pressured global energy prices today. but, prices have been rallying for the past few weeks, particularly the cost of gasoline. regular unleaded gas is 12% higher today than a year ago. suzanne pratt takes a look at why that is and the outlook for gas prices this year. >> reporter: it may be tough to believe, but demand for gasoline in china is pushing up prices at the pump here in the u.s. american are filling up less as they typically do in the winter months. but consumers in emerging economies like india, brazil and china are driving more. on top of that oil traders are worried about a potential conflict with iran over its threat to close the strait of hormuz. >> we're not going to find our if any of these economic sanctions with iran are going to happened until july. and, then of course if israel
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takes any action against iran, that could happen at any time. so, i think the market is going to be on edge for that for quite a while. >> reporter: an edgy energy market has resulted in the most expensive january ever for gasoline. according to triple "a," the average price for a gallon of regular unleaded gas today was $3.50. that's 38 cents higher than a year ago. and, some oil experts say drivers should expect to pay even more this spring and summer. >> i see gasoline prices in the united states headed for $5 a gallon sometime this year. the underlying reasons are the following: number one-- geopolitical tension in the middle east is not going away. number two-- china is increasing its demand for oil by millions of barrel over the next several years. that demand is not going away. >> reporter: others believe prices are headed higher this year, too. although maybe just north of a national average of $4 a gallon.
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they expect america's appetite for oil to pick up as more people go back to work. in addition, the u.s. market will soon lose several unprofitable refineries. >> on the supply side for gasoline, we are shutting down, quite a number of refineries on the east coast, and that's going to make it difficult to manufacture enough gasoline this summer. >> reporter: so, what would it take to send prices here at the pump sharply lower this year? you probably guessed it: another u.s. recession, one that would take a big bite out of demand. suzanne pratt, "nightly business report," new york. >> i'm diane eastabrook in chicago, still ahead i'll tell you how g.m. is looking and acting younger to capture the hearts of millennials. >> susie: another arrest in the feds ongoing crackdown on insider trading in the hedge fund industry. douglas whitman, the founder of california hedge fund firm whitman captial, was charged today with making almost a
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million dollars on illegal trades in google and other tech stocks. whitman denies the allegations. the government's key witness is the same former intel executive that testified against galleon group's raj rajaratnam. rajaratnam was convicted and sentenced last year, to 11 years in prison for insider trading. >> tom: the trustee digging thru bankrupt broker m.f. global's books says more client money is missing than previously thought another $400 million more. that brings the total missing money to $1.6 billion. the estimate is based on trustee james giddens' investigation and he's still combing through records, so that number could change again. so far he's returned nearly $4 billion to m.f. customers. >> susie: a follow up tonight on that $25 billion settlement on foreclosure abuses. nevada's attorney general announced a separate $780 million settlement with bank of america. it stems from a case nevada had against countrywide financial
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back in 2008 for abusive mortgage practices that was just before the mortgage firm was acquired by bank of america. the money will go to fund principal reductions and make up short sale deficiencies in nevada. bank was declared a fugitive in a manhattan courtroom. they are charged with helping americans evade u.s. taxes. the u.s. judge suggested the prosecutors ask diplomatic authorities like the state department for help. for the part the bank said it had not. served with a criminal summons and not required to appear in court. >> susan: so, tom, what a week. we have had so much big news, the foreclosure settlement, the greek debt deal, doubts about the keel. the new york stock exchange breaking up its merger plans with the german stock exchange. and in fact, the n.y.c. stock up
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handsomely today, 4.5%. i don't know what next week is going to be but it was some week. >> tom: it was some week. and the n.y.c. stock was the big performer. let's take a look at tonight's market focus. stocks saw a broad sell off, marking the first down week of the year, the week began and ended with selling pressure. for the week, the dow industrials ended down a half percent, thanks to the drop today. the nasdaq, which has seen a sharp rally this year, finished essentially where it was a week ago. and the s&p 500 shed two-tenths of a percent thanks to today's drop. and here is today's drop. the market never found much footing as europe was still unresolved on the latest bailout necessary for greece to avoid going bust. all of the major stock sectors
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fell, led by those more closely tied to the economy. the materials, energy and financial stock sectors each lost at least 1%. leading the drop in energy and materials: coal and big coal customers, steel makers. coal mining stocks alpha natural resources, peabody and consol energy were among those pushing the sector lower. alpha lost 6%. peabody and consol fell almost 3.5% each. arch coal set the tone for its industry, dropping more than 7.5%. volume more than doubled. it's the latest coal miner to cut production because of weak demand. the miners have seen utility customers switch to natural gas thanks to lower prices. the drop in production over- shadowed a rise in fourth quarter profits for the company. meantime, steel makers u.s. steel and allegheny technologies shed 5% and 4% respectively, even though they have been expecting steel prices to improve this year.
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cliffs natural, an iron ore producer, a key fuel for steel furnaces, slid three and a half percent. the new york stock exchange unveiled plans to grow its business without selling itself to the deutsche boerse in germany. that buyout was derailed over anti-trust issues. the nyse will invest in technology and clearing, that's the business of making sure a buyer and seller can fulfill their obligations. the plan came after the exchange reported a better than expected fourth quarter. profits were driven by its tech services and clearing businesses, areas it will continue to focus on. the strategy helped push nyse stock up 4.5%. futures exchanges c-m-e group and the inter-continenal group rallied more than two percent each. remember alcatel-lucent? it was a high flier in the dot- com days and it has rallied strongly this year including a pop today and very heavy volume.
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shares jumped 13% today...giving it a 40% gain this year. today's buying came after reporting a full year profit for the first time in its combined history. it also announced plans to license certain patents. we saw a big winner and a big loser from last night's earnings calls. social networking website for professionals. shares rallied almost 18 percent. analysts were raising their price targets after a strong earnings report last night. but jean maker true religion apparel shed almost a third of its stock price thanks to a disappointing quarter. it's wholesale business fell at the end of the year. finally, with europe debating the latest bailout money for greece, the u.s. dollar saw some buying interest. the strength in the dollar led to some commodity selling, sending oil and gold prices lower. and that's tonight's market focus.
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>> susie: they grew up on play dates, m-tv and facebook. millennials are the biggest generation since the baby boomers. there are more than 80 million of them in the u.s. between the ages of 11 and 30. with that kind of buying clout it's no wonder the auto industry and other companies have come courting. diane eastabrook reports. >> reporter: meet 14-year-old greer hutchison. she's a typical high school freshman into dance, facebook, friends, and shopping. >> i go shopping with my friends a good portion of the time. online, i actually just got a whole bunch of dance clothes which i spent over a hundred dollars on. >> reporter: greer is one of the
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nation's 80-million millennials- - a demographic whose buying power could top $2.5 trillion within a couple of years. suffice it to say the auto industry is smitten. >> they want a car that captures their hearts and minds. >> reporter: at the chicago auto show john mcfarland talks about millennials like a love struck suitor. he's chevrolet's marketing strategist for products like the sonic, cruze, and spark. >> 40% of those are passionate and excited about cars, but they don't think any brand has given them truly what they want and understand them yet. >> millennials are unlike any demographic before them. they're not big on brand loyalty. and, these are consumers who want to be directly involved in the design of the products and services they use. >> reporter: chevy has been reaching out to millennials with quirky ads on youtube. it's also gathering ideas about what they want through facebook and giving millennials video cameras to record their thoughts. >> i would like to pretend that
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it is a person who does what i want it to do and doesn't talk back. >> reporter: chevy designer joe baker used some of that input when developing the code 130-r concept. >> they wanted something sort of sophisticated looking. it's a car for someone who does want a corvette and does want a camaro, but isn't necessarily in a place where they can afford it at the moment. >> reporter: but millennials are fickle consumers according to gigi carroll and jamie shuttleworth from the advertising agency draft f.c.b. >> this generation is changing who they are quite frequently. >> reporter: they say while millennials may love one brand at 16 they may easily ditch it for another at 18. >> businesses need to be learn to kind of be iterative, adaptive, rapid prototype. >> and it seems those brands that really engrain themselves in their culture and what they're looking for are the most successful. >> reporter: also what appeals to one millennial, might not appeal to another. research by jd power and
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associates found overall millennials favor cars over trucks. but greer hutchison shot down that conclusion. >> i would love a range rover or a jeep. >> reporter: go figure. diane eastabrook "nightly business report" chicago. >> tom: here's what we're watching for next week: our friday market monitor guest is brian lazorishak, portfolio manager at chase investment counsel in charlottesville, virgina. on the economic calendar, two key reports on inflation, january's producer and consumer price indices. and monday, we get a look president obama blueprint for government spending as he takes the wraps off his 2013 budget. >> susie: apple could soon be getting a big ipad order. really big! the u.s. airforce said today that it plans to buy as many as 18,000 ipads. it wants to cut down on the amount of paper charts and manuals its pilots and flight crews have to carry. while the air force specifically named the ipad. it said it's also open to competing android based tablet
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devices. apple stock today continued its march toward the $500 mark, closing at $493 a share. >> tom: house financial services committee chairman spencer bachus confirmed today he's being investigated by a congressional ethics panel over stock trades. the trades happened leading up to and just after congress' $700 billion bailout of wall street at the height of the financial crisis in 2008. bachus denies wrongdoing and says he welcomes the opportunity to set the record straight. just yesterday, the house passed a bill explicitly prohibiting lawmakers from trading on inside information.
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until today's sell-off, stocks had been on a steady march higher, helped by stronger economic data. tonight's market monitor thinks it can last. we caught up with jim stack president of investech research at the world money show in orlando. >> last summer we had that crisis in confidence that surrounded that august 1 deadline over raising the debt limit, and what happened, we had a plunge in consumer confidence that took the market down 90% of the dow declining in that correction last year over a three-week period around august 1. however, since then, consumer confidence has rebounded, and the markets rebounded rebounded, with a surprising amount of tickical strength and also good strength in those macroeconomics statistics.
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>> tom: do you think the lows we saw on labor day last year are going to hold through 2012? >> yeah, i think it will. going into an election year, the market is historically stable. in fact, bear markets and recessions are a rarity in an election year. there's only one presidential election year since 1940 that had seen a double-digit decline and that was 2008. in contrast orbit other side of the coin, there have been seven presidential election years that have seen double-digit gains. if you stack up the evidence and you look at wherey woo are on the political cycle, as well as the economic cycle, the evidence is certainly in the investors apse advantage. >> tom: is there more evidence than seasonal factors? >> there is. if you look beyond the macroadministration ching people see in the headlines every day, which of course is getting better. from a technical standpoint, the market is on good footing. in addition, if you look at
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leadership, we have a special-- a negative leadership composite used to measure downside or the absence of that downside leadership. it just triggered a signal this week that carries an 80% probability of the market being higher both six months and 12 months from now. >> tom: that seems like a pretty good bet, pretty good odds. >> i think the odds are pretty solid that this year is going to be a lot more stable than last year, and i think it will also turn in positive gains. >> pretty good. we had pretty easy comparisons. last year the market was flat. >> and certainly considering the volatile, what you call roller coaster ride for investor emotions. it was a tough year for investors to stay invested and to ride through it. >> tom: one of the areas you're looking at is energy. is that a direct play on the economy? >> in a mature economy, maturing economic recovery, assume it's still intact, which i believe it is, energy is one of those-- one of those sectors that comes on in the middle, latter stages.
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it's also the top performing sector in past presidential elections in years will by the way. , sectors that tend to do well in a presidential election year, historically speaking, are industrials and financials. although, i'm a little bit nervous about the financials just from the systemic debt they're continuing to carry. >> tom: industriales, of course, is also a global story, too. do you think the growth we've seen in emerging markets will continue. >> the emerging markets are going to do okay this year, single-digit growth. the u.s., i think, will see a little bit stronger than the two, the 2.8ing% growth. that's why the forecast. and that again, from that standpoint, both from the steal another sector i'll toss in, is the technology sector. i think a lot of business and corpivation delayed their upgrade cycle in the industrial and technology areas for the last couple of years because they were fearful of this double-dip recession that everyone has been forecasting. now that it hasn't or it doesn't
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materialize, i think that's why we're going to see the industrials and technology be be strong performers. >> tom: jim, you've been a market monitor her on "n.b.r." for 28 years ai longtime friend of the program. how would you judge the investor sentiment now compared to the market michaels you have seen? >> in the first program, i dow, i remember, was at 1200, less than .1 of what it was today. we go through these rolling manages of fear, and you can say greek like the late 90s, the dot-com bubble. this is somewhere in between. we don't have the extreme fear we had at the 2009 bottom. but i'll be honest, if you look at some of the fears, and crisis after crisis that investors haven't had to face over the last six to nine months, they say very fearful time in the market. now what's ironic looking back over those 30 years is that those fearful times historically often provide some of the best profit opportunities. >> tom: just, how about
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disclosures do ow of you or your clients own the funds we mentioned? >> yes, we do, in individual stocks. >> susie: and finally, it's our new friday feature "lou's been thinking" with management consultant and educator lou heckler. tonight, lou's been thinking about angels and a 2,000 mile trail. >> i've been thinking about trail angels. several of our friends have hiked the appalachian trail, that amazing 2,184 mile path from georgia to maine. and they all talk about the trail angels. it seems that people who live along the trail do things to help the hikers who make the trip. they may leave bottled water at the trails edge or tie treats on low-hanging branches so hikers can grab an apple or a cereal bar for a boost of energy. sometimes, they just sit along the trail and to encourage the hikers. it got me thinking about trail angels in my life. i've never hiked the appalachian trail, but i've had a few angels. one was miss king. she taught english to seventh and eighth graders and she loved
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the language. she wanted us to love it, too. we were required to memorize and recite for the class at least an eight-line poem every week. she even made us learn the lost art of diagramming sentences. at a 40th high school reunion a few years ago, a bunch of us got talking about teachers we had and someone asked, who was your favorite teacher? i was one of seven in a circle and we all named miss king. we were all profoundly influenced by her. so, here are some questions: who needs your influence? who needs your help as they walk their trail? who needs you to be their? trail angel? i'm lou heckler. >> i'd like to be someone's angel. >> tom: valentine's day is am category up, susie, so there you go. >> susie: that's "nightly business report" for friday, february 10. i'm susie gharib. goodnight everyone and have a great weekend. you too, tom. >> tom: good night, susie. i'm tom hudson. goodnight everyone. we hope to see all of you again next week.
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"nightly business report" is made possible by: captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org
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